GME Sales Blog

Many states have created financial incentives for movie production such as the state of Iowa’s Iowa Film Tax Credit.  The public policy considerations include an economic analysis of the economic effect of these incentives.  One aspect of the economic analysis is the money multiplier effect.  In general terms, the money multiplier effect takes into consideration the profits, wages, and purchase of goods and serivces by film production within a state by movie producers.  This economic activity by producers then results in more economic activity as the monies expended in the state are spent by other businesses and individuals in the state and the cycle repeats itself.  These cycles often referred to in economic terms as the money multiplier effect generates a wide variety of revenues to a state from personal income taxes, sales and use taxes, and property taxes.  In analyzing the effect of film tax credits, governments must weigh these increased tax revenues against the tax credits offered.